NDAQ - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Nasdaq Fourth Quarter 2019 Results Conference Call. At this time, all participants' lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

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

Ed Ditmire

financial and Good joining morning, year quarter us for XXXX full today to everyone. discuss Nasdaq's Thank results. you fourth

as On the CEO; our members Regulatory John CFO; we'll of and Friedman, the our Legal After and Michael open prepared Chief remarks, Ptasznik, Zecca, Officer; to a are and line Adena presentation our other of are our management use The team. up the information Q&A. intend website FD. non-public disclosure press release material, to with obligations means Regulation website. disclosing on complying We and under

I'd results concerning Information like with differ in Actual statements reports and meaning these XXXX. results of to statements relate factors future this to forward-looking events periodic Litigation the that may and Private our within statements presentation differ the from Securities as to certain Reform cause is forward-looking SEC. contained in actual and release expectations Act from during constitute may materially projections. you remind of Q&A press and that such, the could filed

will call turn to Adena. now I over the

Adena Friedman

ambitions following and XXXX remarks made Thank good joining Nasdaq's My Thank on for Nasdaq morning, forward today drive to business direction; financial areas: the our will and strategic you you, us. XXXX and performance; the focus we've for everyone. and Ed, progress our along beyond.

report lower fourth as lower quarter rose performance fourth in $X.XX Nasdaq's our of the significantly compared in the We volatility financial XXXX, XXXX, and revenues the million period to to compared same quarter very of year strong net pleased XXXX. quarter and to XXXX. market $XXX a Turning despite U.S. while achieved in environment results. share I'm the fourth to for the full volume per in earnings non-GAAP X%

execution in our total by Turning was across trading of another growth for growth XXXX billion, decline in of organic total businesses, our a our non-trading high X% exceeding tempered margin, a strong non-trading longer-term to for efficiency by of with exhibiting we moderated revenue leverage hitting year $X.XX revenue for presented our revenue XXXX, multi-year an headwind year despite Nasdaq, organic operating X% non-GAAP operating businesses, full X% our net also in year. generated increases of trading while growth including revenue revenues. the XX% objectives businesses,

we organically and also XXXX, inorganically advance to Throughout as maximize strategic our to competitive strong to technology while of the analytics a marketplace continue invest guided our core franchise. offerings, sustain our pivot to provider, position and also by opportunities investing

our for We third announcement of are now in our year vision since the Nasdaq. new

our Our of strategy deliver and how how all is Nasdaq our creating our value, clients, can for client-centric but technology-led our for illustrate on disciplined focus XXXX just importantly, more not results shareholders.

great following XXXX order entered a year new with and We acceleration technology momentum We progressed. XXXX. finish intake the in experienced market an strong in as

With average almost the existing broadened. were new XX% higher and of product clients exhibited to usage new sales spend our clients as investment

healthy very are Our levels listings new and a assets we under management record have ETP at pipeline.

throughout highlights quarter specific to the fourth Turning businesses from the in and our year.

our Our delivered it the development as progressed and with segment XXXX, growth quarter XX% implementation growth and organic organic market in technology fourth in of the technology XX% next-gen platform.

impact in total including positive the growth acquisition. of XX%, Our Cinnober the revenue was XXXX

revenue, an for quarter encouraging million, features totaled million the or quarter, annualized increase $XXX The New fourth order intake recurring some wins. ARR, XX% fourth year-over-year. of while our particularly totaled $XXX

prices. marketplace agreed enable associated price industry full recently the we travel ticket new strategy, our solutions called manage to suite to the in the market new risks to Skytra, have signed subsidiary we of of As revenue announced with an part we and partnership a that Airbus with which provide fluctuating air

signed XXXX. we total X brokers platform to business, we global banks banks six in enter bringing quarter, sell-side and two our as our our to the new Tier fourth execution In

expansion We and FINRA Group its and and with existing derivatives also data the surveillance fourth signed including for trading quarter, for extension five trading platform multi-product in agreements and marketplace services. Japan Exchange clients

like I'd of to Nasdaq product of reached stages. you technology Next the Framework. offering, next-generation our on market and update NFF the has development advanced the on platform Financial Work deployment core

product application And of are while we top target terms both platform of our on that efforts believe continue, solutions our the core planning in on on schedule.

XXXX, this of long other increasingly become phases journey begin we important. As

will efficient organizational on solutions. recent And go-to-market our delivery with SaaS-based to managed and support. we significantly example focus and For optimize client changes services made we've approach both our

momentum We scale improved to and XXXX. delivering continuing now our are business up of segment encouraged growth profitability sites the by and and the XXXX set in our business in the with

Turning analytics Services in revenues. prior from increase the segment, quarter, and investment to million $XXX bolstered delivered the our revenue index by during Information and licensing we X% a data net fourth period, year

Information well performing year rose growth higher more long-term respective organic their mature by index driven with XXXX, course in the the and full line data data as the businesses Services the organic analytics X%, market both, as of investment Over growth overwhelmingly growth with objectives. in and businesses

marked fourth quarter for The Information milestone interesting Services. an

by businesses. investment higher the revenue XX% time, For analytics generated growth and first over of our was index

strategic progress secular figures of can quarterly our while this see pivot continue growth I action. to this areas in clear time. And the opportunities, over with to trend born in fluctuate, out exciting It's expect

growth have the we're into investments to move As ensure in performing continue long-term. we fuel engines XXXX, to these the making

working instance capabilities market fast bring the For to to we're and eVestment space. insights private expanding

new and Market provide XXXX. engines Lens, growth in Research products, eVestment new can our capabilities for new clientele existing our and us giving Additionally Management

delivered our increased organic $XXX Services Relations quarter demand Corporate businesses, Services our strong foundational offerings. the in to fourth a revenue business listing in Full our million Investor revenue marketplace particularly of growth X%. intelligence and Moving segment increase, by X% for boosted year our was Corporate in performance

welcomed rate, in XX% with IPOs achieving XX an in win alone, during exchanges led XX% U.S. IPOs period. U.S. the quarter for the a fourth We seventh consecutive XXXX, U.S. the win rate For IPOs. XXX year, Nasdaq welcoming

In dollars in of the competitor XXXX, our by raised. dollars we XX XXXX, IPOs of In the raised excess billion Nasdaq by total, XX listed in well exchange. $XX.X IPOs U.S. top raised the

listings pleased in as are clients in We that trust attract exchanges companies they a XX partner our navigate extremely XXXX. us, markets. them, our from new Nordic, true and as to North their First new adding Meanwhile, public across IPOs demonstrating listing XX are continue to and the including enter Europe, Baltic

Exelon very created ViacomCBS. New or XXXX, Exchange York report I'm the XX either new to the listings, we IEX and had from newly also switch Stock Nasdaq in pleased including corporate that their companies to

in equity U.S. TCF which to market switches and resulted coming transferred of to aggregate listings year. $XXX components global new the also last Sanofi XX their of an Nasdaq, Financial combined billion Nasdaq capitalization with in

transaction annual the record facilitating in On capital private our company in $X.X for a set liquidity side, billion for volume private programs. new XXXX, private Nasdaq market value business

sub-segment. a the business. IR quarter. for increase Demand intelligence of fourth I'm our growing in Corporate the momentum proud offering, We drove the saw that in X% Solutions growth in

and ways issuers. work, acute our solutions most It best the by underscores the new corporate clients public of we our needs, that our our years expanding ESG suit like our build the team challenges for to offerings, them clients' -- help under-the-hood address focus

fourth the Finally, year prior compared against net part active period. very to X% and our year delivered the period, business volume market the in prior quarter, volatility million an a decline revenue large lower organic services reflecting of $XXX comparison in

products. cash the For organic equities largest in volumes X%, year, derivatives the and moderation full decline equity due to principally again, our was industry in

by When market at equity categories, U.S. as our trends, on, I look the we share influence standing, that capture equities and derivatives. have we and cash in deliver lighter consistently represented the factors most European our our competitive and revenue

to offerings FIC working to for where work-in-progress, to the a forward. be area deliver of our continues performance we're going we're smaller Our kind looking enhance

largest XX% Market single capture XXXX while U.S., cash share combined the Nordic for retained of steady market In multiply-listed XXXX. options venue fairly from traded/listed List share The to in versus options, developments. Nasdaq Europe, equities, market with increased In largest in in and XX% liquidity Nasdaq's Stock the the equity we share remains

of which revitalized ideas agenda markets to highlighted effective our also capital our I for efficient with highlight our combined attractive development. also our could one like to and where be regulatory thinking engaging and growth blueprint part April, in more markets our to more help with the efforts, around we proposals market. aimed As clients reform small clients, investors Nasdaq The to areas and companies. medium total our our make broader last outlines commitment would introduced the

plans. In that to Consolidated governance in the Tape the the to give SEC propose to and pleased propose regard, we -- changes involvement merging SIP see to facilities of propose more the customers are

goals comments our detail we the the the in proposal of As are of ensuring we and going focus market recommendations maintained interest the the through period, forward. review comment the plan will on SEC's best and

like about demand across we our in now our ESG-focused Switching our and to our to to commercial our gears, clients talk as would efforts both in from solving launched sustainability, several offerings operations in practices challenges. our corporate support own within Nasdaq complex XXXX I meet advance respective clients businesses.

Bond global ESG Corporate public to the week, ESG Nasdaq the ESG publishing for reporting simplify announced Nasdaq Center Governance, program past Network, we our process This includes just workflow clients; the reporting our And advisory well for for Sustainable new corporate as our companies. as this guide. technology ESG

to bring not a Our and efficiency fatigue. is that response often plagued offering seeking process survey to data is to corporates more by management challenges in that

are clients growing area market. partner strategic to be of rapidly this a the We in excited our to

our offset changing and our is energy to emissions its have certificates across ways where employee corporate renewable very exploring also also emissions. of reduce travel both renewable of proud that resources We're consumption and operations, data commuting. Nasdaq our to Nasdaq carbon that energy usage, locations, office business purchasing resulting achieved neutrality sources the and announced actively energy possible center to further impact

XXXX of our in As said, on progress represented strategic year an terms journey. important I've

path, like that As on we continue to for core the share ambitions several years. I'd next our

trusted new to financial regtech to is trading the partner firms, nonfinancial worldwide. markets and it most market most technology successful and First, become marketplaces

market evolve strategic analytics across the a and management. and operator industry to Second, alternative specialized active as investment is management index, partner to

to serve governance. as equity is investor partner Third, expertise and with across exchange and unparalleled of markets, relations companies the destination worldwide,

trading, our liquidity including by our experience and data private the be to strengthen client operator a for fifth, preeminent the North asset Europe, in of shares, And and as aspects classes, to funds trusted assets. America provider and across exchange connectivity Fourth, private company of traditional the market equity digital solutions complex. private and enhancing position other

against the work and through come. of clients. talented lastly, updating by Framework and our of in today's these notably powerful intelligence, in the of and the We customers delivery ambitions to the forward together investing client-focused through these the of clear we look the team, the Nasdaq Nasdaq most accelerate deployment by capabilities progress intend combination to We understanding the Financial on execute cloud our to needs technologies, incredibly as on quarters our in particular, and machine to ambitions to you embracing

by Nasdaq, completing for As I wrap quarter produced a successful our I up, fourth company. results summarize saying, will for solid our XXXX

forward right maintaining foundational segment leadership relentlessly strategic in direction advancing XXXX, technology Nasdaq momentum confident on the year moving as I Europe. opportunities focused analytics in are we Moving a as in we in XXXX. to on we strong our the our businesses into while and generated remain data marketplace the U.S. pivot this and remain maximize capitalize provider,

details. financial that, the I'll it to And Michael turn with review over to

Michael Ptasznik

Thank you, and Adena, everyone. morning good

primarily will to unless the presentation otherwise in in will be of available the and attachments our year non-GAAP our press GAAP ir.nasdaq.com. focus U.S. period prior that's My to at found Reconciliations the non-GAAP commentary and release can on to noted. website comparisons on all our be results results

shown million X $X last to by XX. and and revenue revenue largely start changes organic I'll and acquisitions the reported million in increase performance presentation as impact quarter reviewing and growth on net of foreign market on net impact offset revenue active organic as a divestitures. exchange This a in result of growth the of from pages $XXX and is fourth the by X organic $X X% X% page from a segments is positive the The million year's services net unfavorable QX $X rates. million in non-trading compared in decline

growth segments. growth Services, is and reflecting revenue. now with saw highlights XX, the period start on I revenue was in X% index X during reflected reporting will million or increase of $X the within review a Information quarterly data which pages the in Organic and analytics each investment, businesses. We X%,

organic Excluding investments on been purchase in would revenues X%. have adjustment QX price deferred XXXX, growth

X% or growth XXXX, growth was of organic year adjustment primarily full Information from the sources. revenue the the non-regulated investment excluding with X% price For Services purchase coming

increase including million XX%. as XX, as Organic projects. growth size increased as a and Market pages on surveillance the Service change an $X the an increase growth or period number XX% request and X of organic during $XX as million Software and revenues primarily in technology shown of revenue or reflects delivery software revenues well in

Annualized recurring request to from $XXX fourth XX% revenue primarily XX% represented deliveries the up year-over-year increase software and revenues, XX% annualized in XXXX quarter down during fourth the segment due totaled million, and change in QX revenues quarter. of

operating For year market income growth the was the XXXX, margin revenue totaled full organic XX%. XX% technology and

synergies experience we Financial in the from As to begin stated, Framework segment XXXX we improvement the achieved acquisition. in a run recurring the to benefits rate our the see over larger previously Cinnober margin and in revenue Nasdaq as expect year-over-year of base the leverage investments

Corporate to number revenues XX, reflecting X X% offerings. organic to growth IR from the and due our pages or higher listed increased companies an Services revenues in revenue on intelligence million Turning increase and $X of

Market services decrease. net and revenues on XX% or saw XX, $XX a pages million X

the impact decrease was revenue changes from X%. exchange, $X $XX the organic million Excluding million in negative or foreign unfavorable

the equities, the to decline period primarily compared particularly period. revenues, reflects FIC to and QX decreases volumes active equity organic in trading XXXX derivatives industry cash the trading The due during lower

and million. to expenses, to expenses Turning XX increased $XXX to $X X non-GAAP pages operating review million

million the came year-over-year our only increase. expenses the or X% a increase range, While reflects at in of high-end $X organic

and acquisitions offset a partially by the was from there favorable addition, changes rates. net of exchange $X increase impact foreign $X in million divestitures, In impact from million a

XXXX, the expense X%. During totaled organic company's increase

with XX, range Adjusting we're represents operating X% midpoint approximate to billion. slide consistent expense increase of organic non-GAAP for exchange rates, Turning expectation. X% initiating the XXXX $X.XX our medium-term expense guidance the year-over-year billion $X.XX foreign an of to our range

increased operating to million was operating Moving operating income fourth the margins, quarter non-GAAP non-GAAP margin $X XXXX XX%. the profit of and in and

non-GAAP the increased X XXXX, point percentage year. year full prior to XX% the During versus XX% operating margin the

the SaaS business to full greater to for The more operating product portfolio offerings the benefits that part from and we model the in we increase year strategically expect to We in towards future. as evolve. in continue technology scalable investments and pivoted make becoming platform leverage reorient even more business reflects margin that our in is our a provide we

XX% tax to the of fourth The full versus US$XXX a to of certain lower $XX tax income. million due Net debt reduction the new of X.XX% quarter refinancing prior The the year and taxes rate fourth effective million expense interest was and notes. came the million in lower rate year primarily million U.S. the quarter of at decrease due balances was XXXX with XXXX the for end XXXX, a $X foreign-derived the non-GAAP with X.XX% denominated year €XXX full XXXX. associated XX% in in for guidance, bond

XX.X%. was to prior share, million Nasdaq between $X.XX Non-GAAP per in or share year the of quarter rate and XX.X% XXXX fourth For full $XXX expect income diluted $X.XX XXXX, per million be $XXX for net the the compared tax to non-GAAP year we period. diluted or to the attributable

to versus Eurobonds capital on caused due by Debt XXXX stronger million by $XX in Turning offset to paper, increase QX payment million XX. the partially commercial of book a decreased $XXX euro. Slide $XX million net value of primarily

unchanged quarter times from XXXX. X.X at of period the ended ratio debt-to-EBITDA total Our the third

paid count of repurchase the dividend dividends million. returned flat. our the our diluted XXXX, the During quarter latter shareholders of to million company aggregate and company XXXX, of achieving a fourth program keeping share the during the And with $XX XXX share objective the in through

to thank for the Q&A. With operator for I'll turn you time, and it the that, back your I

Operator

Our with comes from first Piper Sandler. Repetto Richard Instructions] question [Operator

Your line is now open.

Richard Repetto

there's Good recent at Mike. CBOE Adena. and the market is It the morning, comments close market market the I things -- Good question a first question Yeah. guess, of morning, SEC made like and lot on the on the proposals structure. going and the my you about -- of on then first order. some SIP approval close -- seems

SIP. there I leaves guess what's to response I with would question it if first a approved. the guess, plan proposal And be your guess come come you about is be will plan? follow the -- So, up you to maybe be Will Adena positive think that? thinking on when is What just I changes on how any you're the do going the for Nasdaq? you that -- up to you

Adena Friedman

a that SEC rulemaking. they're is rulemaking. there Well, the putting for the I And out proposal proposal you think way the pre-proposal actually was all works that really for know a as before process

the to the of is the process that consider comprehensive processor a and long pretty plans. information in changes start and governance composition securities So of

there proposals. so of ample multi-year recommendations and to our of clients their provide a for along off lines the the opportunity part of think the be will comment of likely will kick that market for us I the process structure. future SEC peers And that and all that And determining to and ultimately most

the pretty some for will monopoly about the a about, proposal If component things in things opinion in the opinion think of what And leverage encouraged we and of they do other have that best we process kind it securities the to markets. are industry. through way? is as by regulated information we have an certainly How that in you the is think our it, you right their

how our with the how make the clients do you it right that giving in you products choice also do proprietary proper sure sure and So you governing alternatives way? make that And are you're market?

some there's elements to to So total But proposal. it are as we do and go it. and we is modernized taking a we out pleased in as that had we SEC the market's on laid that think be forward. about lot have We think considering need

Richard Repetto

I'm is the of going beat like sort be of a on seems would over to been well-received. return related has three Thank guess years. divesting the your to two what the last you. implementing to And good my assets outlining sort me pivot that then of strategy punch the forward after you -- it follow-up strategy and And then -- providing I weren't understand trying strategic pivot the strategic

would outlined what doing just as is or differences years? -- past three could been differences five question the on you what the highlight the what the for between things, you've So highlight you the you

Adena Friedman

years already for Well, it's down would the five a the we on moving good But we're established. pivot have that we've with the several question, road that I that Rich. in say next line the goals are it.

first of really we we through, we when have are next seeing and over back trends do So that XX our of how strategic a really the announced we the we could believe pivot, years when long-term that our and meaning long this on next XXXX focused clients positioning therefore clients are -- we the what kind impact over should period term XX that managing in are what years ourselves. be

And a so years into long-term we're of kind journey. three

that business. Financial that ambitions And implementations, us provider a cloud-based have things give confidence rather we continued can in our our really we against down we're to tech laid deliver accelerate that have industry to years change, be most of ability those the we've the continuing out several confidence our feel continue next the road. technology the market lot and more The of we delivering I the to Nasdaq gain against SaaS some expand but trusted ambitions we is and how to that regtech services, are difference Framework all now and that for not think the a the to actually meaning

we've industry investment really a that coming get into Data frankly At the management strategic Analytics gotten business, the within pivot. same didn't way our the in know we to time

do and continue really insight there how partner allows has expand even given of think a to level eVestment strategic to us a it and to to them. expertise be think of us offerings we I our through more

down examples right So more where that those more road. the are the and of we're kind feel of couple confident just going a we

the We're laid that. up. offering core markets, private of asset private liquidity can but as terms as one good momentum that I space having on feedback small for in well being five the to expand and private still then the but the fund business out continue And equity very different -- is in also seeing solutions really really picking shares it's ambitions how offering fifth private our us we

So that our we've of ambitions. elevated one to be key up

Richard Repetto

Got it. very Thank you much, Adena.

Adena Friedman

Thanks.

Operator

our question from And next comes Fannon Thank Jefferies. Dan with you.

now line open. Your is

James Steele

actually for is filling This in morning. Steele Dan. Good James

Adena Friedman

James. Hi,

James Steele

services My segment question on in data is in info the decrease market just the revenue. sequential

that maybe you mentioned think decrease. can sequential just but anything was that I FX hoping else of if driver that is a elaborate drove you there's I

Michael Ptasznik

On the factors under reported revenue a side in revenue of one was key drop sequential -- other the unreported -- the usage. from

$X it that And was this quarter. million about was million and $X in QX so

of one drivers was that So the quarter-to-quarter. key other

James Steele

the that follow-up bps same That Okay. my factor sticking million a Was XXX segment sequentially. operating helps. then And also just is decrease $X margins with there? in

Michael Ptasznik

was well increased was in both investments the that as the compensation referred some so it. of timing also Adena of a new Yes, to there well. earlier around there part And infrastructure that as initiatives there's some as and some in

drivers was key why were that the in expenses some up quarter. of the the So higher on

James Steele

Thank you. Great.

Operator

our Thank comes Ghosh you. Credit Ari Suisse. next And with question from

Your open. line is now

Ari Ghosh

Hey. Good everyone. morning,

Adena Friedman

Hello.

Ari Ghosh

market like some for on just was another after strong this seasonality. tech even So quarter -- accounting

or mix And you're newer from you us in FinTech you're then newer either give seeing business? too initiatives update the give maybe could the of the some in-house in the to that just that you this on update to some if traction? from getting space and customer the non-financial So on continues us related your contribution just Adena markets business client TAM evolve revenue could in where an entrants as maybe competitive landscape and

Adena Friedman

Sure, great.

opportunity. revenue measuring of in key so is and revenue markets business and look we what we area how financial key call areas. four core terms exchanges one think business in our growth our One of are marketplaces the I that's So success revenue at in we

brokers. we how The the second offering is smart in out our so offer regtech to and and that banks really surveillance our

terms of them market them. to selling and new to is area the then in trading in this brokers technology third -- trading space. the is The And fourth in solutions solutions banks

went our of from And marketplace those expanding certainly which really had a into having contracts or one service it's still regtech strong client often contracts, having that, vast but characteristics first offered the And we either are them the And as every two both space. growth we're XXXX for new particularly from in-place majority banks marketplace comprehensive the and to managed renewing opportunities the clients. hosting of customers in of because, from XXXX. and delivering and comes service exit the businesses providing post-trade coming broker new That's We're are revenue on of not interesting so SaaS offer focus coming really also and those of to a the now core of client is really delivering service. signing our demand what in the a majority addition surveillance software. a case, continued more in a client often they're and area. the just some in is way to It's of than the up SMARTS. where my the fact on tried as six But offering, expansion we remarks --

a really that the one we and that's opportunities growth area have. So, definitely key of that's interesting

space. Sweden We and launched Australia that, mentioned is racing area, clients into What as expanding this as still you are the year. then two XXXX both go and new gaming horse the have in is sports, betting in And fact the we clients of a very in the been focused number market new last, on small. we the we

soccer We the football which say have should in that in index or football I is space. European

acquisition And that deployed then out -- tool also modeling a insurance. with they of to they've Cinnober, really insurance. the We interesting have risk

transportation into mentioned Airbus opening space gives and us So with it the we in the insurance an partnership. as then

we TAM from we definitely small industry verticals. a there, each base So, that more we engaged opportunities see to but -- in get it's as where going of those seeing are growing something growth a very

also tech these core player a scale we perspective, most argue much to is play that, industry just a in would business, in market business solutions say life brokers. is business. scaled we very particularly comprehensive are I scale a trade It and and a the that's believe and I providing the from trading marketplace solutions cycle competitive this and banks end-to-end the successful to would

business. that on are that with really investing niche we've the side, Data always machine for But platform things. surveillance. Nasdaq then frankly, intelligence Discovery there We've players trying new launched the are in come And little surveillance up to been in

we've so, to sure ahead that into innovate of niche make we And to the market. continued are those stay players coming

new long big So, a and it's as us. is the into and for banks And but answer, the brokers into we're TAM of opportunity growing, expanding area the markets.

Ari Ghosh

of just then margins the follow-up And been helpful. phase, over couple Very related has investment the following a business. the Again, heavy last quick like on the in quarters. solid the improvement

or think more sustained Now business I more appreciate this XXXX thinking But the of lumpy. improvement. in benefits to play a a event? much. it of Thanks of some as out that can be in so XXXX level year-over-year expect should Again, we at of these a margin

Adena Friedman

from perspective. we a year-over-year at And look do that Yes.

a as grow to start go annualized expect with little So, lumpy that through you our and the as XXXX on an topline demonstrate But we to said, can we quarterly be basis. XXXX along can on growth basis, -- margins in we do and things a XXXX.

we've and that. been deliver that do expect So, to we saying all along

Ari Ghosh

Thank you, Great. much. very

Operator

our Campbell And you. with comes Barclays. Jeremy from next Thank question

open. now is line Your

Jeremy Campbell

thanks. Hey,

the Skytra and butcher going deal... I'm to With Airbus this but

Adena Friedman

right. Skytra. That's

it. You got

Jeremy Campbell

potential derivatives look of just like. what And hoping way that that opportunity market? price looks travel first, maybe more to for what is might Like was a us on air the to little like. exactly any I detail size there bit get think about

Adena Friedman

Sure.

-- this really in into be make a is, time the more interesting the ones They're feel in airlines so they was their planning out airplanes. that over larger investments can particular and cycle capital including of more opportunities, really -- stability travel who us that do revenue way. obviously really that they the So, further for can new the look how came up can which airlines for creative so agencies, they they Airbus to it confident idea, their and by with create came revenue

So Airbus They this. came the group natural you being within okay, where kind comes interest said, let's it. of within with of a it -- Airbus. out of the alignment can really provider they see go for But

terms sold, to Let's thing airplane another sell novo launch fly. it's a of a and a client They are client, Skytra. start-up of create prices one but for ticket actually a tickets called of meaning, settlement thing new to thing tickets, the also data. majority as lot the this and both subsidiary the actual leveraging It's in a ticket basically get vast de so to a on of

from have what they say sold looks of are airlines pre-trade And tickets basically and could pricing used. index a -- sources in information at route. and different the that data actually the be certain it execution index they being post-trade an industry routes in then the from the have they both I'll and so So and

could it and or at a in route New routes So can be it London could a Eastern at look to York just to They pricing. from trends Europe. route look U.S. be from different

And a to enables the them if in hedging then future index. create a have And create and that trends to index as the industry can -- allows use so it this tool. they on that that pricing they

-- airlines users agencies where dealers. are natural they and of this So travel broker through

longer-term have it can is They risk revenue system. professional So and a allow for out a their hedge them orientation. broker-dealer to basically

So creative. it's really

our is and We're providing involvement then trade hope to them offer will SaaS-based leveraging we are providing surveillance be the and other continue our across cycle our of to the services overlay service them next-gen life well as that solution. terms operations. they a In there we technology. that offered trading It able we and as solutions are are

So excited about that. we're really

Jeremy Campbell

Interesting, of sell-side contribution of either like answer to in the and but like this traditionally is this similar I interesting. market on us typical signing non-financial signed follow-up new your from XQ? last to can time or something just, tech then the the ramp guess, remind for line execution venues question, to more just And on kind guys in you you Ari us can markets the remind wins P&L for you two

Adena Friedman

Yes.

-- six page trading meeting a actually on for until signing. longest first longest solutions from so until launch of is to from a in client. so of that months on do Then signing very a months time usually signature from usually depending simple XX for a more level we is the So the system the system -- line for frankly the we signing months the X to -- complexity can get comprehensive

so often systems make they're to need and of they then integrating And as it their -- that course inside well. also sure

of are a from complicated to right And say full I from to to several be to end-to-end scale it two have XX common production. ongoing years And then systems we larger settlement clients. solution post-trade of is a months that more would those in post-trade XX So some deliver clearing do nine into terms months anywhere much can signing more these of and now. time

Michael Ptasznik

as recognized There revenue be a will that But standpoint typically will we start in X to platform. period revenue that in platforms described month Adena XX there build higher as from a the building recognition month X that cost delivery. though we're month to to be the out

cost run forward. and And will see As we or rate the going higher is after there more lower revenues in period the right now implementation. XX-month move of become a bit But a the SaaS cost. you the -- that more more of then after it

Adena Friedman

recognition few And that a years to ago. change a rules was the revenue

cost then recognize maintenance we more deployment through as of So costs soon we as revenue into tying base. to sign goes now between it and a higher and deployment are the and service

Jeremy Campbell

and get X, So point? level that that's XX to for that X, at full once revenue you finalized your rate implementation margins run --

Adena Friedman

do production after phase. we into able development complete Yes, the been go to as we've the improve margins

Jeremy Campbell

guys. much so Thanks you Perfectly.

Adena Friedman

Thank you.

Operator

Instructions] Alex you. Kramm Our from with next comes UBS. question [Operator Thank

open. Your line now is

Alex Kramm

tech, Yeah. growth you stay I nonrecurring everyone. morning, numbers of kind but went to the think back here. to on Wanted Hey. the want for market numbers by Good to portion. growth mean Mike it organic the driven a I was you second. said And the bring through primarily

that quarter. was organic this how recurring us are And So be we portion XX% related dimensionalize that because the given the that's measure non-recurring to maybe also like on should up how thinking then than obviously supposed side maybe more we how was can tell to about just you you?

how both I items more like this do or more Is balanced? the XXXX going as making onetime-ish balanced? it trajectory Cinnober think is to about So we items? be the think kind more Or of those about of

Michael Ptasznik

Yes.

respect the typically as So there the quarter more into and change there's in with request fourth of was you play. have come know some the to other elements

I in think went that the from if you can look at the up the million $XXX quarter. annualized million see $XXX recurring revenue ARR slide to you

growth business. at of of revenue the on standpoint of a the in see to the that's side indication from can requests what's regular a think change type seeing cetera. more I recurring of the you of And that an more happening et you're -- in to basis relative the So look recurring

Adena Friedman

that. changes And of No. I the composition wouldn't Cinnober necessarily say

I both their non-recurring at the was finding we the revenue that that recurring that way and it terms we revenue. generally consistent of think with look are in

Alex Kramm

–oh sorry. enough. Fair Okay. then And

Adena Friedman

can slide that's sequential the you And of see increase. kind XX, quarter-over-quarter

Alex Kramm

to Sure. at but cross I guess the it. mentioned really the not about And then question then was closing back I think call Rich just I coming beginning a you the think of CBOE, there

I for it coming a to back So second. guess

Now, market already we're updated envisioned some a bit of this pre-cross a on when was the I brokerage kind of you in ago on couple any clearly I commented but this, it world. like of little to first there? know mean, addressable years the thoughts this that closer exists

some And deriving that Maybe it bit be more? market? you're is really the would of at what closing economics if option? So addressable us actually of from could the a portion that give little you great, dimensionalize maybe risk the

Adena Friedman

components we of this financials I the all, disclose material trading of generally, how that, change in we I of – address expect our to a don't say be But kind to don't different Sure. business. U.S. first terms it. of to Well, would separately think going equities we're

on changes side implement that demand as sell a as and supply some the really as what to last the focusing of enhancing true side years as buy very the functional with close, in I and over really been say functionality think closely continue close. couple and of useful generating We've I at is the to reflection Alex would the and the changes working we've making the been possible close. more of make

think that to are trillion several dollars of tied it about assets management you If price. under

SEC quite supply-and-demand were but So We opinion yet concern ultimately in. really were than having price concerns financial event exchange frankly the their that address from in were SEC a had expressed to the just it more There of who order, We discovery be approved comprehensive our of disappointed is investors, a really who didn't lot that really perspective a a competition perspective, rode perspective. and is price. closing quality issuers There critical. the investor market see and in rule approval from indexers rather ride that filing the in. not but the decided a important

So said working we've last with we're pretty clients for years. couple our that, disappointed in been that, the having but of

to expect any that financials address to they regard material to our impact concerns And very close. a see be from that we any we We new and on vibrant that. entrant have with sure able this don't to on continue have make

Alex Kramm

enough. Fair Thank you.

Operator

you. Thank

Chris from Allen with comes question next Compass Point. Our

Chris Allen

of we number. bit. about if of were was a terms just very one can was deals dig or the it into everyone. drove the tech obviously needs little of a in I if that order specific And new just just they think think that? actually color concentration Morning, the two then in wanted terms so deals not intake concentrate realization. wonder revenue big what – type I you and It's that to market

Adena Friedman

Yeah. very with We were many the -- was contracts on working number. had new for We've it pleased these months. we been –

quarter. and like make mentioned our of are working agreements and Those clients. The large at and came So that long-term deals smaller terms into on are play scale the some in they in just time. There of Group quarter new the these well kind mentioned were those of new sure same play with came in all significant all existing – – that came the as FINRA. are Those we expand other existing kind came contracts the of as fourth into two we fourth to all as clients to we Japan extend the significant. we in banks fruition some that some Exchange

some we've our existing signing is said it This base up positioning revenue but particularly So in always well revenue customers. of terms our actually a intake into us lumpy. our as very into well that – year, is growing new order quite lumpy is securing as

fourth quarter that play quarters, definitely came prior into mean, I names bigger So in I some don't of than – there in but were the more names the quarter.

Chris Allen

the pulled to – just $X believe And million quarter change request. on in Thanks. you just $X you mentioned I million. the forward last

this a So It going Is in to we've overall kind a question the of magnitude? – bit past. little what Alex’s bit. seen in little just mean just outsized seems just I back increasing to relative out

Michael Ptasznik

some the deals other came this There specific the were Yeah. of we that also on were – in a deliveries couple specific that typically quarter than QX. software change on through, requests request see that higher of and transactions both

quarter that we quarter So had to business. that last this both and we increase continue see the in

situations, done. couple had requests were some of right, a additional there where being So specific other you're we

Chris Allen

Thanks.

Michael Ptasznik

and it's to the $XXX to mentioned back just want side And just QX. since Alex to I I to make to clear that million was – we're want on $XXX go I Alex’s to question when sure just million recurring QX the

So, rate. that progress revenue has continued the to on annualized recurring

back $XXX So -- Adena business be going include would to year's last million as makeup that their but the similar. said, there that's very would of Cinnober,

the seeing that are revenue addition we grow continue the benefit change about. to just recurring So request to were we as in the talking

Operator

next Deutsche Instructions] question from Our with Bank. Brian [Operator you. comes Bedell Thank

now is Your open. line

Brian Bedell

the starting morning, can back now? and is. effort market many know much. in was Great. just you non-financial way to large a ramp-up Good Adena, contribution how have when this Thanks Maybe that folks. just were clients you technology. you I that very back frame go on handful how

the four market as being mentioned elements of different You tech the fourth.

that want And is is. how carriers? the rolled about you big that that to travel new think get of sense air derivatives, be price many think out potentially do can to when a something you Just

guide. to business, then, above the trajectory And X% as in it was fourth XX% quarter. look your It's growth this we XX% at in the

combine X% other you that a are good for to the target pretty in once in even recurring for you XXXX revenue? growth at the with exceeding growth segments, of looking again potential the If X%

Adena Friedman

there. So, unpack there's a lot to

think year. to seven this in We that's non-financials. start So non-financial we were probably do But clients trying around of clients -- But But range. the mean least that of I say number. kind to heads. in we're those, I not today our XX five an account signed let's with the exact I at the that's new would them of markets. we're

So, definitely is it a us. for growth area

space, And that signed as other of space. kind clients -- the in way in markets. signed transportation the I sports mentioned, new clients are new the other along We we clients new non-financial in and signed we

it's small definitely -- but still -- TAM expanding area as there. So a we keeps growing it's mentioned, and but the

that the forward. move that our terms we're the will characteristics we In very forward. X% continue are rate. way in kind evaluate believe And tech XX% the business still the we rate that to going But right growth market as is with to the -- we growth overall do to business are of of we evaluate to consistent see of pleased growth that

the that we growth sure mentioned continue revenue. that our is deliver invest business. by in to before, why outweighed we But the against make -- to the the I should which to want investment as continue in growth we And of our be

expansion should start XXXX. able going into to XXXX to we demonstrate margin and some be So,

overall And you the non-trading businesses. also mentioned

Brian Bedell

Yeah.

Adena Friedman

to growth the longer-term we believe way is are our outlook. X% look rate. right again, That -- to -- longer-term to mid- is of that we overall The X% what at -- kind

evaluate that's so, And to continue our the we to right way business. believe

Brian Bedell

Thank great. Okay, you.

Operator

with next Hill Thank Ken comes Rosenblatt. our you. from And question

line Your open. is now

Ken Hill

thanks. the of probably the kind little sizing about how kind you're to I more been time, you a know some forward. businesses for long competitors, it I and has going offering sizing base about how category flesh more you're within your little morning. offering bit particularly about Wanted for how on guys this more, a ESG a particularly little in European Great, this important differs was -- thinking a touch from seen hoping of bit bit, recently you the the exchange for of out we've but Good

Adena Friedman

have Sustainable market investable well of Well, States that Bond United European the areas -- is is any sustainable two much just leading team our sustainable as commercial then could and products, we're area. And launched in indexes. so Sure. and One on it a focus. the in with that bond we have either Network bonds, be we really we've very Europe. And ESG-related now ETFs our who's nascent or

is side I are of other products. what supporting And call really investable then those So kind our clients. the corporate

So, we that. are different in our lot than of a peers

the can setters the different all metrics from need on very really now We really centers, increasing how and in demands and right our on There are investors partner complicated there. support. focusing reporting a on who these we of have just to makers, be are all companies these and companies world helping ESG. It's managing that's out

the be to partner chosen we've so to them. And right

our In terms advice them them been of that European to has this consulting interesting markets, commercial it's us. services area in also And ESG, tools, support a encouraging particularly for but growing area. on giving report to really

some this services say with technology would small it's But at to consulting I I XXXX, hear are So about as going well. it we because want you'll very offerings supplementing our say. into point more just

I new think for a it's everyone. area

Ken Hill

for taking question. the Okay. Thanks

Operator

next Blostein question from And comes Thank our you. Sachs. Alex with Goldman

now Your line open. is

Alex Blostein

morning, good everyone. Hey,

into XXXX. you as guys touch to capital wanted priorities Just base on look out

level the I leverage fourth paid down like in where little bit So want it It of you be. kind paper the commercial is, to of, you saw feels quarter. a

particular buyback out Thanks. in you as So looking updated the XXXX? around are guys maybe some in thoughts

Michael Ptasznik

Yeah.

the going with invest So that opportunities great And to capital business plan look We're so number we and consistent to with for stated. one again to on thanks continue the question. priority. for the grow continue that

our as look grow addition flow earnings grow. In we to that to the dividend and cash

to -- achieved comfortable grade you're cash investment additional targeting maintaining a dilution to end And of status. from offset we're debt respect buybacks targets leverage with buybacks, is then our that And our that the the we if would there the We've right. debt at see we from of equity programs. any that we are the standpoint are then the available and using so

looking articulated cash And beyond things at -- in going additional take the buybacks a something -- we've of there's consistent consider then way But that so really nothing we looking into with point horizon point. filing doing not we longer that period additional quarter-to-quarter very invest so be thing. after to over at that consideration with capital at the if a specific there's in that we'll within That's if some the past. that's look we'll available those all are to time,

Operator

you. And Oppenheimer. Lau next question comes Owen Thank with our from

Your open. now is line

Owen Lau

my go can morning. I Skytra Thank an want thought Again never Good have do manufacturer. airplane to -- I taking of for with you Nasdaq the back Nasdaq business deal. question. to

to out reached this there But bidding a process? Nasdaq Airbus that mentioned you Adena for So was competitive partnership.

and industry? in please increase increased Also doing about the Thank Nasdaq chance of other outreach to could this you inbound like you. talk is new how what things Nasdaq costs identify to markets new

Adena Friedman

Sure.

It's the the have we market with investment So about actually our one market companies general, get in becoming so areas like we space. would that in of tech. to we been be up up inbounds. of we process for sure ended how of a time, Airbus like same people new in sizing been organization Airbus think doing Nasdaq we're at in what know make that that of terms the sales terms their question I But But for in more not partner. do the

right can finding that to most that make a about interest expertise market's economy -- think the approach. into continue we to where we that apply the the sure we're We industries have like

So we've our to in technology whether is space where transportation, insurance addition sure in sports these the making in been investing in areas that's are all sales relevant.

we they can new little our been a where need creating where So non-financial have more of within showcase to capabilities also we these our education. bit technology modules markets an

then we and at customers. we're to faster other technologies the it to can to these provide easier make that partners looking also And deploy

surface important opportunities So too. and to be of able We all to of doing those we're part but it's are expand inbounds very that to things love business. us that for grow the

been sales a has So us. ramp-up definitely effort for the

Owen Lau

slide trying -- helpful. That's go I'm the a XX. A related to want very to back numbers question to little I bit is understand better.

So we How handicap was higher? way ARR million, kind two of, we you the that of flat. these mentioned which million, higher. the times the should XXXX new right the $XX numbers? XQ for XXXX, was, third was is ARR quarter What's second intake XQ reconcile $XXX Should order would like three quarter these expect numbers? to be But or

Michael Ptasznik

Yeah.

recognized new for or will So some that on good in with with contracts that to temporary to the the on that respect that. is it's is of million with depends ARR contracts order intake respect ARR -- turn that into an of again But of basis. some of to portion recognized temporary ongoing ARR a million -- $XXX quarter that recognized. that already of but within not the some going -- renewals the $XXX we somewhat have It are be

ARR. we are ARR the in and in was if will contract reflection we already they'll be there and could Then then period. the be have a let's that say there's So in if increase a that then us, for that the extending renewing another amount have client paying some -- an that the five-year

intake the is number. will be the to increase So of -- an continue new going annualized that's for multi-year. it. new that It's what's is clients not continuation a a but it. It order to new the And contracts

a X-year contract. the number be the could the that of size depending million or on So $XXX

being the contract the for of reflects order total amount that intake the So contracted. that's total time,

Adena Friedman

terms that like, quarter-to-quarter-to-quarter, good mean a I XXXX. we feel of the it's from way of ARR I I Yeah. also that, through ARR, mean in pretty progression would look at actually

it's that a But turn ARR. into majority continuation would of million of there's right, numbers. there's say -- is I the combination goes or Michael growth of And the two lot either that that, of that the $XXX will lot -- the into a

And we're out us. new That's giving used getting to for ARR. stat a

intake interpret that revolving we'll So that order versus understanding the better how we're continue so explanations sure make you it, of have forward. going to guys around our to

Owen Lau

Thank you.

Operator

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

Your now line is open.

Sameer Murukutla

Sameer Good Carrier. is Michael for Murukutla questions. This Thanks actually on taking my morning. for

expense I guide. you divestment EEX I of related And think. the question a to Just think the NFX announced to

I the provide that's guide? is guess guess with on, divestment, expected you the R&D R&D And how in year-over-year. that much when Can into close? flowing you I XX% in So are of seeing benefit think up guide, just what's And details I the expense that to from around XXXX? XXXX some guidance

Adena Friedman

Yeah.

expect EEX start of couple through our is, over to the first as the first come the of to migrate And to we a financials out thing the we through go second to that NFX So of continue in XXXX. quarter. quarter things

it an However, R&D initiative. was

in So R&D been it our reflected has numbers.

so that these with what on are otherwise -- opportunities. And into growth the that we are some we are numbers higher saying NFX therefore our with we're basically potential moving the money change R&D of higher spending

those concentrating are And I market in in R&D total the R&D, opportunity. things increasing investments real the mean why And very also are ARR potential. really a have that revenues we're -- think because growth have is we increasing. our The large reason on

supplying So and considered building to banks brokers. solutions our trading be That's terms initiative, a would an in good example brokers. and the actually and out of R&D of that banks

business But investments so we in increase from supply the clients, But have our to that that business those to -- is so are revenue revenues. the up. support in going a very significant

the ledger, guidance one you of increasing our you only we're we're But So side the line. along showing also the and cost -- the are the spend. revenues showing when R&D

net cost program year-over-year. is of same So the the around that

Operator

Thank with from Chris comes Wells Fargo. you. And question Harris our next

now open. is line Your

Chris Harris

least still Thank feel your opportunities? the growth on at be priority centered focus will a organic you. for XXXX M&A Or strategic like, morning. for more Is you Nasdaq? Good do

Adena Friedman

Well, time we evaluate acquisitions frankly. the all

way that a particular think we ability accelerate we our it's at. part in And can -- So, are our achieve what acquisitions segment. the about strategy, of always they a to we look

capabilities we new So base support a to and technology in and our expanding expanding data focus either are analytics. or with the particular our within a our segment, on clients ways client

will did framework. we last as done small long have it also provides market we acquisition as look so we And frankly But within -- year. well services right a look at always at acquisitions the financial services within we corporate --

pricy. So, are I we look say them. right always pretty now at environment they The would is

real a strategic benefit are to model, the we making definitely So we on, addition an obviously financial with before sure really in -- focus M&A to we we're initiative. the conviction move have forward around make decision

look where we a lot. only a few. inside And created obviously at But have of we a executed definitely on has that discipline Nasdaq,

Michael Ptasznik

so the think look I are outlined that organic opportunities mentioned if ambitions engaging in those the organically. at. her pursuits the are we're accelerate we then at And long are M&A, criteria that to those priorities look you ones strategic strategic that with if Adena we're with looking additions that But earlier, will are the we we as obviously pursuing do and as comments meets and five financial in. to there the that that that

Operator

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

now open. is Your line

Kyle Voigt

view through margin final revenue operating the the being this see for want new reasonable metric? some stable reasonable? you Obviously, just But maximum as risk any Tape Do fair really to be idea still do into develop Hi. makes this follow-up early that what Would prior a that or Or some even to you the fair see to it SEC would it's SIP. And SEC overall way Consolidated and develop pool? to other do have committee certain new question seems to a the you if related a language and this transition? proposal. its fees days. this rule, Maybe governance on SIP

Adena Friedman

moons formed say a ago. committees rigorous process, many since pretty SIP these ever is many, I always SIP were have through So, that, the would the first fees gone regulatory thing the in

regulatory So fee overlay have a there's it already does whenever lot a change proposal and there. oversight of

by what reasonable. and not they have fair defined They mean

I our is products governance involvements the decisions, think will created. will that -- there of make will fact recognizing that sure the also in it and of comes it view are types that from that have help a the is that value that client those that the be structured lot SIP of but way the we

that, the pay thing the creation regulatory product, just is fair the the fees of to the pay for a the but market have not oversight And only exchanges also other for environment. that support

And SEC have it goes consideration. don't things to period. I think those of in all into taken forward has moves how the it how though ambitions are So -- coming their there. the clearly defined see we'll

Kyle Voigt

Understood. Thank you.

Operator

our this now over for Thank you. Ladies closing to the and gentlemen, any concludes like to turn question-and-answer Adena session. back remarks. I Friedman would call

Adena Friedman

of quarter In and a Thank Nasdaq's are XXXX XXXX year closing, full with solid and performance starting off strong Great. we fourth you. was momentum.

continued on focused on priorities. our very year you discussions leadership deliver throughout for make look much to executing your technology-led Thank I today. we the Our for progress team strategy the strategic against stakeholders to our forward our and remains to time our aim

Operator

call. Thank this concludes Ladies participating. conference and gentlemen, for you today's

now may disconnect. You

Nasdaq (NDAQ) 29 Jan 202019 Q4 Earnings call transcript