NDAQ - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Nasdaq Fourth Quarter 2020 Results. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Ed Ditmire, Vice President of Investor Relations. Please go ahead, sir.

Ed Ditmire

Good morning, everyone and thank you for joining us today to discuss Nasdaq’s fourth quarter and full year 2020 financial results.

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

Adena Friedman

you, morning Thank us. you for thank joining and Good everyone Ed.

remarks, I to clients critical health are year while our the role new we which begin price like crisis executing liquidity discovery capital in and Before in our we and that depths we COVID my the to operate. our in raising, note on employees’ starting on the maintaining economies and the and I at safety would facilitating of focus continue

proud client and very the we for team provides extremely a I resilience rollout XXXX. crisis, our challenging new of business, our Throughout through While of manage of this remained have hope the Nasdaq’s environment, the vaccines community. this health

clients more have a including for vaccine role markets them within as important funding unprecedented for to source with near them through weather enter clients ensure We the My full research innovation capital to to unwavering of as and capital listed to the commitments steadfast the of of help and creation, our we funding this our companies in Over remarks and our never volumes facilitate focus across Capital remained our period. we very worked needed on liquidity and and employees, mission challenging that will Nasdaq our today XXXX. production drive and well have following to along job liquidity XXXX performance; forward XXXX past of and year, the and our direction with our business as as to for we made and together the plays levels deepened handle our our record strategic year critical fourth companies. beyond. Nasdaq’s quarter raising Nasdaq have progress financial and ambitions resiliency XXXX partnerships and areas: and and markets been

Nasdaq’s results, fourth strong our year quarter the of to full Turning I financial very to report performance pleased and for XXXX. am

quarter, compared fourth fourth the per share in the the XXXX. fourth of for revenues a the net of First, XX% we to XX% XXXX, of compared increase while period, non-GAAP million year quarter achieved was prior $XXX to earnings $X.XX quarter in

organic revenue total we volumes Turning from trading primarily growth our $X.X full options. to along generated growth increased of year market due solution revenue equities the including organic revenue XX%. Total XXXX, to the and billion, net was U.S. revenues with from of organic a in segment elevated growth XX% services year our for segments XX%

periods model, year-over-year. billion was revenues diversified could to index foundation. address opportunities a marketplace none year a of us year annualized strong strong In the trading fourth and market trade a in Nasdaq’s guided fluctuating year-over-year also maximize and of Nasdaq. the predicted recurring X% which for valuations, the the going XX% highlights volumes elevated our new and revenue strategy $XXX revenue, the needs up also core momentum. with was markets year, to since to including unique we our of Investor while healthy and unique We listings for Day, XXXX million, XXXX to have as have period XXXX at invest year and capital provider, XXXX, the terms robust ARR, our SaaS performance by environment, build these and and continued the the strong the of benchmark forward, volumes, the across results strong offering types Throughout The up that of a at The quarter of competitive our we ARR disclosures, clients strength rising of software-as-a-service of introduced the very operating fourth and or from development in year business independent SaaS and November or of our XXXX of inorganically another technology to quarter, $X.XX strong particular, annualized against capital new a our the very creates begun offerings, organically of execution to formation. investing quarter the sustain position analytics Because for entered revenue finish we the incredible now announcement vision of allowed in levels. or core year ended ago. off fourth fourth us Nasdaq environments of in product strong our of advance

but results Our stakeholders. more we strategy all can how on deliver importantly our how creating of focus not our our for our client-centric and just illustrate full value for is clients, disciplined year

focusing to to Now, highlights on I quarter turn am results. for mainly specific businesses, our fourth going

quarter, management ETP delivered end year $XXX of in as of set momentum highs $XXX market well assets contributions and from in the quarterly under and analytics during both XX% licensing new of indexes index segment revenues billion. driven a especially data. our million the primarily Nasdaq index end both million in tracking We period period, $XX intelligence fourth strong positive net as from revenue increase by investment prior Our

investment segment with and and look As our our Investor asset in and asset been improved repositioned engagement growth Day the our from index owners presentation, for consultants intelligence noted managers, to we has market we clients deepen our as franchises. data

essential be partner business to the We community. are to building the out focused investment on diligently this

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

For with our will integration Globus coupled example clients our to with data expansion progressing products to new we popular of and workflow advance asset we and new owners indexes increasingly our with geographies. platform new and alternative data our investment are for trusted and capabilities continue

from segment, driven in delivered projects increase Turning market in net fourth prior $XXX infrastructure next million remained rates, SaaS year X% higher our revenues foreign the flat. we while technology and is from total to and operator for revenues period. the This quarter exchange revenues market changes by

pleased XX products. SaaS chose of am Over of the which to new course customers, report technology our XXXX XX I welcome market

the of with in dedicating In service our a new clients resources projects, impacted January communication on our new from XXXX, delivery The of stated $XX XX, issued implementation to traditional one-time settlement a intake complex our software customers. changes have million in expected half for expense significant exchange resulted and project, particular an the to project order actions related taken As expense we mitigate adversely and factors. delays request group been discrete solution noted enterprise we and operator period. more our implementations timing particular for investor for market in clearing from in an on-premise the to a investors levels pandemic costs and resulted the a approximately with taking funding on calls, post-trade to an the team. for for technology and reflect updated change implementation initiatives fixed review project client need expected second In by previous our one contract. we the of price the deliver have resulted XX-year better detailed markets specifically a internal The losses and to from finance reserve reserve

resourcing of for unique longer but also We a expect project demands. one to project higher to COVID-related the the under-appreciation prior from aforementioned due a project spend due this increase probably duration to implementation and impacts,

objectives of business. some project, one of learned fit what very this with ensure contracts are apply the the issues While the to technology market will future we we to have specific profitability

As technology broader are business with the market market exit our clients, infrastructure starting XXXX. improved opportunities operator we we see the as sales to examine

we have months upgrades. unique full not few engaging are projects new to us infrastructure But more we recovery sales with to operator new energy last Both a forward we that in they operating in with and incrementally move a sales and existing period cycles. elongated – are with a seen clients system market are the pre-COVID unusually However, recognize with environment.

buy trade surveillance this sell and trade side side the maintained offerings our full and entered our of staff segment our strength technology execution XXXX momentum in Additionally, base business with year we position business. throughout XXXX led growth of strong by for with a and revenue XX%

and During the fourth in platform report we money more provides cloud-based an than America financial Verafin, a X,XXX acquire which agreement with and to laundering also investigate institutions announced fraud. financial detect, North to quarter,

laundered essential institutions. on $XX in financial become Once leader on have compliment the year Verafin moving a technology sophisticated billion for focused to continue that as methods laundering the closed, Nations to established money system through find notes for solutions. leadership SaaS market trillion United Nasdaq’s crime regtech every a global financial create technology criminals undetected, funds Our flows $X anti-financial anti-money robust, advanced to up for statistics will

Despite with mission we ability market Verafin market crime our going execute and confident highly long-term the our Our to leading technology XXXX, to in new together faced challenges against in in is remain become we strategy opportunities of anti-financial forward. provider technology. in the

industry XXXX, of businesses, quarter our record. trading maintained marketplace Europe, during delivered million options $XXX year a Moving the while the revenues position year fourth area most the revenue the business fourth in XXth our ever multiply year XX% the over volume The a Nasdaq States both of foundational increase its competitive business segment in row. United helped increase an prior of to a strong period. listed traded our services new our XX.X set averaging of market trading a This U.S. across XX% day, XXXX. quarterly from quarter for make for and million net contracts record options options active XXXX

platform the share on-exchange Meanwhile, listed set European XXXX. market for the including Complex in was Nasdaq trading marketplace multiply for first and options high options the Equities index year, country the fact, in XX-year new time, Exchange options. both our a In largest on

business portal delivered corporate ESG demand increase a $XXX private for particularly revenue our IR increased board despite of as and intelligence, listings in quarter, our the activity platform well as and strong market XX% million offerings. Finally, services segment in fourth IPO

issues Baltic representing January. win and billion, process momentum total. incredibly in an for virtual this XX% row, for XXXX to number the in U.S. carried result, particularly on the one listings, a all We year, adding Nordic, exchanges a new in particularly XX% operating a attract United XXXX and with an States year win a Our has second Also in to in into win in Meanwhile, quarter for of was strong busy for XX% companies and new year SPACs. as new overall the IPO Nasdaq $XX.X fourth rate IPO a elements of for adopted for companies with And continued of IPO eighth busy IPOs capital a the including terms rate XXX environment. IPOs North Nasdaq the team terms capitalizing from rate, First led across XX% the industry consecutive and of IPOs successfully with XXX XX ranked raised XX with activity. XXXX. welcomed including Europe our exchanges The

Nordics, Electric we XX Pepper. companies was equity billion new up $XXX begin the entire XX market Power, and the These listings account in capitalization. us corporate American aggregate listing issue to strong setting including in corporate position a both global Nasdaq also had Across Dr represent XXXX. AstraZeneca Keurig as our switch U.S. and X% in transfers business XXXX, in Nasdaq, the We their

quarterly for record the XXXX, particularly annual side, company new particularly transactions XX our with for the and company intelligence our technology programs private IR governance business ESG private our the market in to our related liquidity facilitating drove in recommended Demand during completed saw a new private standardize Nasdaq SEC tools, quarter new or platform, was diversity disclosures the and the U.S. filed consultative on volume set On fourth XX solutions, busy that a record. fourth in standard diversity X% explained level and and lastly, with ESG period, quarter. And have coupled IR at which we seeks proposal an increase listing growth through framework. the a minimum services sub-segment, board a

journey. regarding important As we at the remarks today, beginning represented my XXXX I strategic progress an our on made year the mentioned have of

Investor market As Day would a data services and initiatives our new I workflow our and asset XXXX like and we ambition alternative our the In provider core market to ambition XXXX to to our anti-financial is community technology and capital workflow outlined partner solutions the are reiterate we our to to solutions. corporate of indexes IR of ESG solutions and key trusted continue deploy owners for expansion are governance on November. for cloud our expand to delivered path, and the segments the leading be market platform accelerate full to our be to In establish the offer geographies. partner new key market the is core clients Nasdaq’s key crime at that U.S. enhance ambitions corporate technology business leading initiatives platforms, in to to of and service corporates. for Verafin. core SaaS and to are share and complement reporting and is corporate listings In of to intelligence, investment end-to-end tools to combination the core drive investment And ambition for be the initiatives adoption our the our XXXX technology essential crime anti-financial with technology,

progress services, ambition And U.S. to operator equities of solutions. We in-market derivatives to are derivatives XXXX the our ambitions the in our expand for key and our suite forward implement of to trading platforms be Europe. our these to our and cloud next and the come. and is to equity distinctive to markets market look core multi-year initiatives equity our increasingly derivative pre-eminent updating continue our Lastly, generation migration to in products the equity leveraging quarters and on on

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

maintaining on pivot maximize strategic to into advancing marketplace while foundational a leadership data technology businesses XXXX, U.S. relentlessly our and Europe. remain and opportunities as provider focused in forward the segment we in our analytics Moving

We will officially month. celebrate Nasdaq’s XXth anniversary next

mantle the this I in history, review to in the year. important near in moment at February. that handing upon milestone corporate over last generated are the strong that, we confident call build of as end a it With I to we momentum company financial remain earnings direction our will before right Michael moving for the final we turn details to the his As the Ann

While we career Michael’s earnings Michael’s reflecting on on this final of our consecutive earnings at to here thank last at like Nasdaq Nasdaq. spend his Investor PMS, some I time call. our incredible and and Michael call for tremendous to occasion Day in XXrd would and service

new as the are expands we but prepared CFO well his to Ann into our and Dennison of responsibilities Chief greatly, him stepped miss for Skule transition his Strategy will We role Officer. Jeremy become

Now, to you, over Michael.

Michael Ptasznik

$XXX quarterly each all Adena primarily the you in a net positive including for million, performance release a be favorable increase X foreign million Thank XX%, ir.nasdaq.com. recurring morning, with changes market in the those strong million X% increase XX% revenue solution press business analytics start of good as the impact or XX% of which to million of our reviewing our section X kind remarks, Relations located on noted. of I results organic I and organic impact $X market index reporting very review $XXX to to focus growth of million The Page period contributions a investment is and a organic and rates. and and file a everyone. from will services highlights acquisitions and website businesses. increase GAAP organic data financial in segments, million on by My growth results each segments. positive will now in U.S. $XX XX. result at in from $XXX our of year a during from the growth was net revenue on found of in and the XX%. will in million dollar the $XXX non-GAAP or will otherwise positive quarter compared Reconciliations reflecting increased the the well I be can exchange intelligence year increased Annualized Organic ARR non-GAAP fourth period prior was of $XX primarily revenue, revenue our comparisons as period. revenue prior commentary Investor start reported Pages presentation and growth shown as revenue and in unless within

to definition. in reminder, a As trading not futures and related revenues included ARR the AUM are index

the of operating of quarter the X percentage while percentage period First year increased to full XXXX. versus XX% was X prior XXXX margin margin year XX% points XXXX compared point

trading Now, the quarters fourth looking third instruments in XXXX the index, of to That achieved forward in of increase to XXXX. for of indexes our earlier economics an thresholds in activity first licensing quarter licensed the year. and certain triggered

and confidentiality agreements what index reset new the of say year detail this agreements mix quarter revenue approximately of quarter in compared some for our in on that is XXXX as to we provide the million and of two the product activity This limits lower we While the we XXXX. XXXX, of assumes the fourth $X trading of the of begin the economics lead can similar periods. will the first can to this,

increased million million a revenue X% changes The market to $X exchange. higher Turning ARR there Organic driven increase SaaS from revenue or and revenues. growth by was $X totaled or was and negative previously period. margin mentioned impact the million increased technology, positive was a market primarily organic in foreign loss X%. the on compared $XX by the expected and the operating was X% $XXX million was million to X% project. the to technology related The reserve implementation in period impacted $X prior-year

compared the U.S. XXXX. increased the in fourth full primarily reserve, and XX% the totaled was quarter prior-year growth or there $X private growth and for revenues ESG $XXX the platforms XXXX driven Organic compared revenues, million $XX and to or and foreign XX% from million Corporate X% increased Nasdaq impact an year positive margin to revenue growth was the unchanged Excluding period year ARR in in from by Organic a XX%. the of million, in in prior revenues operating million, in period. was market. increase increases XXXX was exchange. XX% XX% listings revenue $XX Services changes

quarter due segment fourth to strong IPO XXXX, higher in very prior-year of was a the the period. primarily the the variable the During was operating decrease period in support marketing for The activity. of this of operating down compensation during in from XX% margin XX% and expenses margin

year or XX% full services XXXX. million, million million $XX increase For the organic platforms there operating corporate unchanged or was $X in primarily Market during U.S. industry increases margin volumes. equities derivatives impact to in from a XXXX, reflects net the was higher increased was revenues trading cash revenues and The increase XX%, and equities from XX%. $XX organic revenue the exchange. foreign The period changes net due

the services operating of from points For margin comparison leverage operating reflecting each strong percentage X higher X market XX% increased period XX% fourth XXXX, points prior-year full of than in higher the was and margin XXXX on revenues. trading XXXX, quarter XX%, year the percentage

SFSA launched approximately and with Nasdaq Clearing the $XX the the relationship the to and Authority’s clearinghouse. Supervisory following of robustness Now, program supervisory following Immediately million. regulator has independent to been today, Nordic enhancement of on constructive comprehensive received the earlier The with an Financial of administrative and September the review, strengthen extreme initiated working the member a following default Nasdaq in throughout issue Clearing and SFSAs decision event XXXX. the after resilience SFSA or the Clearing investigation market our fine a Nasdaq the warning their Swedish movement a decided review of maintains commodities market SFSA. cooperating

observations addresses SFSA program the effectively We the made are in by review. comfortable their the that

to business our While to of impact and the findings the commodities the appear indicates and changes the disproportionate that serves. the of to clearinghouse incident that severity the recognize review by the clearinghouse, SFSA made the the size be initial

public communicate our to legal we’ll broader next review due the our and and evaluating continuing steps any options to members and are decision in We course. the

Now, and increased technology. reserve increase turning or million Pages $XX expenses to million. expenses, X XX the organic inclusive to $XX million a review to market related $XXX XX% increase operating to reflects non-GAAP $XX of The million,

compared of a million reserve, of also increase from acquisitions the the X% as total exchange organic XX%. Excluding increase the increase to million, to $X the $XX of growth million revenue and due $XX was was changes impact or foreign organic a impact the increase in The rates. from

non-GAAP As noted of release, the to primary billion expenses were guidance the $X.XX year three of due full in press our factors. high-end prior XXXX January our range operating XX above

IPOs; XXXX implementation compensation in expected under related the will variable assets On loss and licensed future accounting of First, delivery Technology becomes elevated to management the spend a the impact ETPs number exchange related higher high aspect and for a higher-than-expected highly associated revenues contracts, Market in quarter changes $XX and record reserve. Market explaining quarterly probable rates; the performance reserve software of million multi-decade customized our as contracts with in the project. contract. last exceed loss when that I volumes, the the Nasdaq a accounting third, second, that expenses The a Technology quarter to item, trading will foreign the to revenues fourth of in such of moment in record the of requires it costs certain us system from

loss of of we During clearing part that probable for to a significant the of incur regular that over due it refined revised implications plans large-scale particular process, quarter, we project COVID-XX. of logistical post-trade as and would In a implementation became relating remainder review the the that specific our fourth part projects, a client. in project implementation to our

result, a the recorded loss. we the $XX reserve that reflects expected million As

to of to approximate The billion. increase compared XX, the reflects the guidance to anticipated range first we the An the as The quarter impact the contract. approximate acquisition guidance as reflect exchange expenses to billion expense at an $X.XX guidance X% X% reserve non-GAAP Market are in increase XXXX Turning Tech the million does closing XXXX. of $X.XX on initiating range to Slide of due our rates, M&A. XXXX foreign excluding Verafin expense $XX operating midpoint of organic net well changes due additional in

non-GAAP and unchanged the operating XX% fourth was and operating profits increased $XX operating XXXX non-GAAP Now, the margin million year-over-year. moving quarter in margins, to of income

of in versus and XXXX the $X reserve, the for interest XXXX. the quarter, the operating full of tax XX% year. the margin was was XX% expense rate would fourth the million fourth prior points XX% XXXX, basis non-GAAP versus million of in effective impact been decrease Net XXX quarter million the have the The up $XX year period. Excluding the prior-year for a quarter non-GAAP $XX fourth

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

a The used December proceeds along $XXX transaction. with million additional the of stronger to to outstanding the versus $X.XX XX, prior finance and to of an Turning expected increased Verafin Slide borrowings partially primarily increase by in by book $XX XXXX, are debt our euro. bond December XX, of billion caused the million be approximately September to billion values closing due the Eurobond offering $X.XX acquisition, of in issuances to

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

During stock the in million million. the common XXXX, of XXXX, common quarter million. repurchased paid the stock repurchased amount during $XXX in common of stock in also aggregate the amount Company the $XX Company and of And dividends fourth $XX the

Verafin. provide on a to the brief like I’d of Now, acquisition update

and process of XXXX. through the first the We expect quarter in close to approval continue Verafin regulatory progress to

acquisition adjusted revenues closing accounting total impact We both $XX which XXXX. as the for quarter we over well recognized contributions non-GAAP acquired actual And increase revenue. deliver calculation deferred This period year after will The EPS investors such, million, XXXX. of As to price Verafin full and adjustment beginning Nasdaq’s that XX growth projecting deferred currently of reminder, will in writedown XX-month be the date, as and be expected the analysts the need first businesses the included impact in accretion months from as will of following remind organic this the Verafin a purchase beginning $XXX XXXX of close, in is thereafter. growth of are for reflects of excess to beginning an organic in Verafin revenue on close. I’ll estimate to in revenue million and

consecutive also allowing me that and kindness will very I’m during career much of repay to time years. Finally, be also principled their I they my and take want efforts, esteemed colleagues to for with over outstanding team appreciation before as pursue honor for some been you, the and my and working And express call I’ve my want and XXrd with to Adena privilege contributions want an able this education our time, I thank to want to to not, the my I pleasure whether thank quarterly to and had all moment Board them analysts and and Adena of retirement. be years. to forward investors and to at incredible want my mentioned, time last whom looking it here extensive Adena or It for coming the over thank I Nasdaq. for gratitude of family and leadership. exceptional working the has an especially Directors. my her a the

of the with working to Q&A. be call the as back into for hologram and an not excellence. record occurs. exchange the to is on enjoyed XXXX CFO QX turn Ann the will I’ll CFO initiative with I so breaking I a my operator definitely and with integrity, will I I’ve be person organization hold quarterly you that last said group Ann, I I As when more it taking And look that, will who of she excited of that am reigns. confident intelligence her, serve call, could this forward investor

Operator

Repetto Piper Thank with comes from Instructions] Sandler. first you. question [Operator Rich Our

open. is line Your

Rich Repetto

Yes, morning. good

next But on phase in to the move and want space. I congratulate both exchange to both as the First, roots their have Michael they deep Jeremy career. of

So I congratulate both guys.

we overriding for fully Adena, up is was the know you X%, for it is in rate, for run drop you the but experience question investment but Sheraton I the you and investment intelligence? revenues, for at still if have you I think it question I I mainly here is Is my XX% to organic guess the for for Michael, take, especially range two growth bit, still – in it and XX% intelligence, investment an reasonable example, run-rate last the think your to adjusted in So, when X% understand, I a the quarters. really at didn’t intelligence, it’s look the

Adena Friedman

Sure. just I fourth with that versus any broader revenue want Michael? to he make having had first discussion will Why start clarifies the index then provide you I he actually clarification, answer Michael the the quarter And don’t if the of sure question, quarter Rich.

Michael Ptasznik

the much the are basically, in Yes, detail, that into contract. there points works but Rich, I certain go contract is way the too can’t elevation

And try some to that so to if of activity those has year it be QX. we on beginning trading the will QX the want so run-rate reset the question? compared a and in basis say as that $X the then XXXX what then activity to is of and QX amount Does comparable mix each a same for on in for and million in at the that that that same there of period basically decrease depending answer

Rich Repetto

Yes, yes.

Michael Ptasznik

great. Okay,

Adena Friedman

that segments. the interest so investor lean we of experiencing are in Yes. the our of future question, does And indexes franchise of And we proud the in our terms have in pleased and investment by broader index the think been do economy. the extremely level are of our intelligence we obviously we Rich, into growth generally that

pleased with that. So we are very

and and are that analytics really also market more stable, just we really, strong. but across also businesses growth the seeing I think solid are data

outlook the we not So on change we or long-term the to business the are our for of business, agree our are to continue would see medium course I our the asking medium index that we to you also but fact whether will for we of continue I to maintaining fluctuate, think that as that business. outlook back we business, perform can for the continue values to progress and in that long-term whether outlook update

Rich Repetto

Okay, thank much. you very

Adena Friedman

Sure.

Operator

you. Thank

question Fannon Jefferies. next Our Dan comes with from

Your line is open.

Dan Fannon

the in maybe is the that? kind And the you as of reset this kind discuss I and question as segment, My order that of morning. intakes, year-over-year. the around market margin discuss in Good know context think COVID kind delays so bar that some multiyear you accelerate the mentioned you talked the for the Thanks. more unprofitable and that have decline you quarter-over-quarter and that charge of business of in implementations of contracts? could then the if progress what the does tech and over then have for about kind forward we a margin of about time as that and the some you period, means contract restructure going and growth

Adena Friedman

Thanks. great. Okay,

are we think come a order our for the on clients that with that situation. of and with the are say taking things I I our engagement has those been lower the primary intake, driver there particularly for order that about some us, So two When XXXX know very of projects would intake impact COVID into significant on play.

really here of our in that the were clients experienced infrastructure temporarily the capacity on projects put have is of that many focused all market very early more technology they of in the operator resiliency been where have have that very our with on this and hold. to volumes. have fact focused and First they work to but some And year the well, on planning and now been the fact them planning managing we high do really, on us proud been they year served are has

XXXX. through the when are was going second did to into we think with as it. starting are them more I thing we productively part that we XX we engaging that’s sign intake definitely much would I it been is to that engagement number with engagement, year. new future. And and as in-person But particularly So order sign, mentioned, ones clients this the of in the new and including have XXXX, of that they harder with they but engage important we a start the then is am drive that lot cases, did clients larger think some in

again elongated those projects of had some cycles. So, sales just have

impact So, really been has primarily. it intake, I think order COVID on a

situation. the particular In the market situation I an terms think to was of going isolated way forward, – at look that is

of the it they internally the actually have last clients signed a scale we have monitor situation we they are steering a which over case, – situation reviews, assuming would where be we XX projects had X contracts, have large to and do similar board then and that we track have new the in to have one this But are in We expectations. a not where quarterly very, years we according we particular recognize a seeing will contract a that loss, that the life only have remaining loss for the our is we means loss. recognizing now, which goes in

it doesn’t forward. it on a one answered so Dan. hope accelerate makes the it question, impact negative isolated just doesn’t situation that, that the I that this so have margin. margin going think but I your – It

Dan Fannon

Yes, thanks.

Adena Friedman

you. Thank great. Okay,

Operator

Thank you.

with from Bedell comes Deutsche next Our Bank. question Brian

open. Your line is

Brian Bedell

Great, morning. Good thanks.

basis knew on just quick two-parter, service of a is in be better very a on I that obviously Just strong, line quarterly of ‘XX the the ride, outlook get in in episodic sort Verafin clarify, the you handle just to could of deferred there you adjusted come And the got if Michael, how a very lifting congratulations movements in reiterate then I a missed wanted we top we mentioned environment sort results on if then you maybe part for that? way as expectation could I Verafin $XX as be have clarify that will the of revenue of that calculated the revenue terms And ‘XX and given into just which ‘XX? side is million strong for seen, if an revenue to well. and that just revenue, the could revenue Verafin included for line by your of contra the

Adena Friedman

I’ll it will I Yes, to Brian. Michael over the great. question you. turn Thank answer question. listings the Thanks, for and Verafin

that’s the mentioned increase of year-over-year, entry drivers we if recently fact of our terms revenue that X% that and total think much on recurring had in On the net the key XXXX. about we revenue in for that the listings spend that in that is of the business, recurring of if business becomes a exit rate business rate I listings having the you think side,

know, year. So beginning the – of collect the collect we annually we you in fees them and and as

that, fundamental to drivers that’s thing that think the of the one business. I So, think about in terms of

one our I I many all portal are reoccurring recur contracts, as look as is multi-years, call for report what and that course, system, IR year-over-year. of technology at the our the those SaaS of them would we are thing of many think them, them, kind as services our of here well some business second of businesses,

And occurs advisory are rate so revenues our rate ESG are last you that service, our obviously including we higher for have that services exit benefits. on if what higher year have a call for XXXX there XXXX But right for you and project some advisory entry you are therefore a that based.

recurring. a And more revenue so project, of we revenues, is we have less projects might a recurring that might part that the have little one line that

into So as hopefully, drivers of go it fundamental you a how sense about of business the to we think that gives XXXX.

it Let me Verafin question. the on over to Michael turn

Michael Ptasznik

Adena. thanks Yes,

So, of to for said there which transaction on would in adjustment timing have that we closing we we of the revenue that XXXX excess million. adjust the we But be anticipate and Verafin, when that the be $XXX the do of couple in will the obviously announced is we the consistently we what said to is first QX. anticipate adjustments to

close for that once full a just prorate amount accordingly and the is so and we year number have transaction. we XXX the the So, to

purchase prorated deferred of reflected $XXX be estimate the million that price in currently $XXX that as we Secondly, our million will well. the will off address which from year in either revenue or come the results first

to a the that year estimate results. reduction of be we adjusted there $XX that number first so in And will million

Brian Bedell

back And for whatever go that XXXX – for rate we or right, plus XXX Verafin have the in we growth XX% ‘XX. the to eliminates so

Michael Ptasznik

Well, the and will results. it’s technically in able to so quarter updates first next we on be or finalizing XX provide months more we are adjustments, over that the the again,

better, number XX a the over be it’s able will we So first to but months. little fine that tune

flow expect the only into So, quarter. QX the to transaction since we XXXX, through in really it close could but first

Brian Bedell

much Great. Thanks and again, congrats Michael. very

Michael Ptasznik

you Thank for much the questions. very

Operator

Thank you.

with Our next from UBS. Alex comes question Kramm

Your line is open.

Alex Kramm

everyone. Hey, good morning,

a I cleanup few investment – here questions think guess intelligence. just on I

That’s just And for fees the trading then, on index the sequential you business, data market line? Thanks. the specifically and give in On why us audit between it me. that breakdown decline can AUM? and

Adena Friedman

Sure.

revenue how is on index the So, the generally trading their from the what Alex data and other the AUM futures much of I well – comes is is as index data. driven coming we think versus as that look side, at other

about from about futures So AUM when we revenue evaluate and business, third kind the and the of comes two-thirds a of that of comes we the from the say data. revenue

revenue the I generally And quarter, at that XX% the thing fourth in overall. a of be XX% the futures look The other range is said fluctuate that could are we at have the types ranges those quarter, past it of you if to the way will think a those as fourth numbers look revenue it, are every obviously, to was right accurate. And the futures of but quarter. bit, including little the

the lower that previously strength but so lower the versus revenues and in In the testament million a the usage, nice what actually it market for to call show continued of XXXX the even year fact business. to quarter, activity, think a with $X fourth data was terms year-over-year market of is from performance the from that that I in was side, data unreported revenue think particular I the up we was

Michael Ptasznik

Yes.

from and coming the data Alex data it’s business. number for million $X sales actual the drivers one clients big product new of the Just again, market to the was is the market really in of quarter, of the

Alex Kramm

not way, be the so quarters, gave breakdown to specific last numbers. us pretty by you of the couple more index exact some are And you going on

going that? are to You stop doing

Michael Ptasznik

we I we a last going think Yes, on that that regular that wouldn’t said basis provide quarter necessarily forward.

numbers number keep in And mind. so to is the the two-thirds

Alex Kramm

Thanks, enough. guys. Fair

Adena Friedman

you. Thank

Operator

you. Thank

Chris Point. Compass comes Allen Our next from with question

line open. Your is

Chris Allen

market some seasonal just activity your from the technology environment, things. sequential touch on a little one-off of surprised Yes, just good morning, I of and of from in the client strength just impact but perspective, it’s to given a activity just challenges requests, the current everyone. from kind kind change usually wanted perspective, of bit doing

would there color any helpful? So be

Adena Friedman

can accrue of I that I our the that make – mean, benefit do as think agreements change terms our short-term and to reflect as some revenues in know as and we request requests work the we other in you the other adjustments third quarter. revenues to do there for clients well of change kind

tends think of as end before to us before year commitments I get as the do quarter to year. types be they the as end of higher people with for them out So that to us we revenues the clients try for of quarter things and fluctuate, the do to plan of the those just work a frankly fourth

get highest So that the any color that, there is sure tends quarter. I Michael. just to for at to the fourth quarter higher – number be be am on particular not to anymore has a if

Michael Ptasznik

it the Well, driven fourth quarter I and the think by year if full very always requests, QX, that relative is highest to you is change year look is things relative on are seasonality from a this a if others even year is the highest QX standpoint later to in that really historically, the quarter. consistent concept full basis

Chris Allen

it. you. Thank Got

Michael Ptasznik

Sure.

Operator

Thank you.

Ghosh comes next Our Ari Credit with from question Suisse.

Your open. line is

Ari Ghosh

of you anything unique can again, is it’s impacted? that that provide there thinking color that or there, maybe business continue? the you see growth wondering some As Michael, impact about And color that similar regard in XX% talk was just Just to was Verafin, run-rate I this? am pandemic. with to just I another great? side And in there yet, a sense you on there let is then added you quick facing specific you that sense result you if impacted have as pressures Thanks. So, could noticed result about tech that’s be of know, me continue maybe should to that just think? if expect any about any but on of of say in think as not a where I revenue that’s any is of one that market would I as segments a or any client more Verafin getting region we

Adena Friedman

yes. Sure,

we think I our brokers have banks business, clients. and we infrastructure market tech at that overall then So the look the got market operators if and have you

I that the and in it’s were one in as it’s on mentioned And to significant much of infrastructure I think we the think some clients, as of I comments sales year we I focused those as that as needs with think of current resiliency about as in our projects. And also to to saw trading their immediate managing really sure really of of managing so they well levels. engagement that that make the segments capacity those mentioned clients market important slowing elongation the my operator

they if of so put were upgrades, do they planning And some enhancements plans or on hold. those to kind changes or

these plans, I are have they customers go focus with think customers also, be with those also they their know they elevated able forward their to to volumes. that want as right and the dealing from trading

So, hesitant to middle in do. to they I put the were something on also them that, an think was upgrade of

more not off So wherever we levels to experiencing year. see starting – that last to I to still can’t as but are starting before are we and at put think engagement XXXX COVID exited we we those and say these saying, the we from things would are clients have I us, starting to is that’s engages

and I their or think engage the also funding engaged until with some have to that are they just more them hit waiting products were active environment. with normalized as are of issues very continuing at markets us launching of or clients some looking new

behind So, those that that. are the the color – things that’s are

side broker SaaS question, delivery. healthy into actually actually and we this continue nice though and see also the plays banks engagement, the based On Verafin and a it’s to growth healthy

trade our easier much thing the our to a to execution integrate, whether clients it’s for or it’s So, take surveillance and solutions.

well more, clients that add sure for had proper a to online had – the had setting increased and as users I would surveillance went demand was as to that went say make of they environment some so to as the coverage. a remote more they normal And

Verafin into where delivery. a plays is aligned then which that cloud with based there more think it’s SaaS the based and question, I brokers the banks

managing So, banks implementation with continued of they through crime a for to clients it’s engagement the have program. right brokers and lot anti-financial the and their

see did the market clients and infrastructure see that operator think level they So, solid the they here. of impact had a I we didn’t same entity as at

going XXXX. good about their feel into and momentum progress So, we their

Ari Ghosh

Michael. so That’s Thanks great. much. Congrats,

Michael Ptasznik

Ari. Thanks,

Operator

only re-queue reminder, Thank to then limit you. question please a one And yourself follow-ups. as for any

with question Carrier America. Mike Bank next of comes from Our

line open. Your is

Mike Carrier

morning the Good thanks question. for and taking

strong on are in ‘XX. ‘XX for guidance expected clarifications the getting the to on Just just any year there

maybe that. I the the there XX% see strong get just And index maybe then have assumption mentioned backdrop we in how in we the expense around and those you that give businesses. just slowdown wanted do think much FX some guys guys growth base to seen, if to from related given is listings in you you your where flexibility

Michael Ptasznik

always the weakening the combination of of at euro. really in to X% current the of guidance the and is with of for is we ability but we how then come significant SEK where fairly to And we are been that last spot rates dollar is there So, up FX the the provided, has – make and estimates some relative level those we And develop average the there, the a looking to of year. we it that’s relative adjustments. kind really delta

the take we in to certain are and from going of invest important lot quarter – it saw marketing factors and capabilities. I to away then want were there are investment items we the that increases down, comp required to I some had new periods will those continue want is think slowed But some they a related where spend but forward. adjust the then in investments that where other it’s things to future, accordingly, fourth continue don’t products the our grow build where business which you if and as to is obviously, for are

Mike Carrier

Thanks a Okay. lot.

Operator

Thank you.

Capital. question with comes from Hill Ken Our next Loop

open. is line Your

Ken Hill

Thanks. Can trading are pipeline your maybe up. then on what your SPAC some impacts think and it I your a kind might out so thinking there listings seeing maybe Hi, of that’s about quarter, about particularly markets and picked kind you and also going IPOs how that how wanted attention of you with to a Nasdaq the but back – from know to but you to also so of come there, much listings perspective number getting called in platforms the activity business how corporate of only private I was the the in strong SPAC your comment good growth morning. really like items business, forward that that? on impacts not

Adena Friedman

Sure.

versus or IPOs win actually we of remainder that into was proud that last were of think the I as we that of the And XX% well worth it’s had we we the then as listings this I company’s XXX noting and year, – we XX% an XXXX, So are for to see particularly companies had go rate believe, engage have and SPACs. as we us very companies of But fact operating to XXX and back. with of tend level I terms a healthy and very continuing our to have operating of come to of potentials pipeline, SPACs, SPACs. company activity in both market SPACs have sight. longer think a operating quickly we line we don’t when listings quickly at view much that tend we look

a diminishes, little bit sight a our of probably have for the of understanding really view. operating only with think then level of we quarter. So, some have first line who demand longer And the to in SPACs our of companies tend really I

market the and out. see the answer my SPACs go next say, healthy But pipeline on a year. to the performance markets certainly very how in companies, question when with have terms then of we So, the continue to beyond and and a weeks to of half know, impact first we through the see to does see And companies. is the develop. tend have don’t an both have of market in we active for the operating we the that And you companies would operating probably as I And pipeline that. SPACs will several

benign a should a we pretty market half. have first So, assuming environment, healthy

Ken Hill

Got it. Thanks.

from guess say? for about it let’s anything to private Just companies as many asset coming market relates I so think perspective public an

Adena Friedman

Well, of programs are market thousands still said, environment companies. we active companies that a record us. many with IPO for last XX as private and going public, mean, even was private for really And had as it there year, we are I a

companies So, there. of in is that shift I that there just lot think out we a

the and the is of both has serve them. Nasdaq to are private public of are for ability some ready the preferring and stay markets great that Some thing to them

Ken Hill

Got very much. Thanks it.

Operator

you. Thank

Our Wells comes next Chris with question Harris from Fargo.

line Your open. is

Chris Harris

you. Great, thank

increase component too? a should So, platforms that a you private variable as to markets we revenue. are then of recurring corporate revenues or is contributor revenues in us that are you what markets in private those the today? mentioned most remind And to Can there being assume the

Adena Friedman

Alright.

disclose is So, specific to the don’t separately all, It we first of sub-segments related of we Nasdaq private part listing revenue don’t disclose market. that. that

is available we that primarily we that our of execute I nature that the So would the on make can are – say you It’s the clients, revenue correct. behalf paid But program. tender to variable, got basically the of you. you programs for

So, of that it – recurring quantum nature is just business a percentage to it’s of as is in is our as but is, very listings say. overall, not the listings business the a it small

Chris Harris

Thank you. it. Got

Operator

Our with Sachs. Goldman Blostein next Alex question comes from

line Your open. is

Alex Blostein

was OpEx can cross-selling partial part of what you and transaction, about picture deal expenses year? around are much obviously hearing as provide your for expect I bigger Quick closing I closer do guys guess, of Great. the you for, revenues revenue a it’s you you growth Verafin’s compelling expenses? XXXX pretty color the opportunities embedded guys once the little both feedback kind of to Hey, getting and in Verafin also know question sort some are some on closes rationale good clarification account I Verafin, you guys customer that take have one morning, everybody. in guidance guess But how into

Adena Friedman

Sure.

do Michael, you take So, first to part? want the

Michael Ptasznik

Yes, sure.

reiterate the and that which margin Verafin offering year. put Verafin you into explicitly, breaking adjust account have amount take and obviously then will was are made about is out you XX% comments we we it you that what the can for towards but to announced EBITDA that the So I we when the that was estimate can Verafin so do and acquisition

So, the then Adena, remainder?

Adena Friedman

yes. Sure,

engage So our and positive. our with clients as their been very we actually, have clients, clients

a to serve more. if So the that to even our surveillance just you Tier with a technology, want these think saying are us It’s calls we product capital before getting closed with questions that to had your apply X technology, have learn great our clients that how and about etcetera? the Tier good customers we of our going are integrate anti-financial banks be I that X crime to markets could from from lot deal. we So think we offering in particularly

journey continue vision joint our obviously deal, as with that announced banks the mission but I we the we ready to when take there and to world, to our sever the the a is Verafin advance think mentioned them in is to business. the largest for to get product

And investment area to so advance bought the platform be is significant of be to that’s a serve our continue the primary that will an able banks our largest area, over and to we time big it. investment why and area of of to part

So it’s from already. that great engaging to are with in interested us clients our know very

the we as And they that pleased together. I their a clients on I really as integrity the I player partner think the presence second in market, we is very going us high Verafin with strong do ability we forward. sheet, to manage think thing have think us the obviously have to they strong are appreciate business a have balance a the

Alex Blostein

Thanks. Great.

Operator

Thank you.

Owen Our next Oppenheimer. Lau question with comes from

Your is open. line

Owen Lau

the thank of track be latest the and morning development Good Market for in Thank Abuse expectation? question. very the surveillance Is the to about on original talk you please still color your you. Any of Could cybernetics traction you buy-side it helpful? my taking Europe? on and Regulation more compared would

Adena Friedman

MARs, of solutions our we’re buy-side as opens or to for calling is Abuse been in doors cybernetics that actually sales – what and for has sales to has Sure. now the it what a that change, over years, good it the definitely solution. or our community, last Yes, we through few our been catalyst the also the with buy-side call been Market also conversations definitely surveillance brokerage surveillance the managing

making traction good in buy-side it’s we’ve a solution our the relatively surveillance that still been, of small of We there. momentum with good terms and year say, very it’s I a had business. are sales, would part But

tailoring needs a making area to tailored say, buy-side, is the an acquisition, So be that buy-side – great I we would – product, continues specific we to are product are were. was it but the it to small it original sure and quite the of what a the where needs wasn’t and

with of that had more their and customers So, but we engaging couple have sure really optimistic the we spent it momentum. meets we’ve small, But and have making that to be sales needs, there. years really last a now continues solution we’re

Owen Lau

Thank you.

Operator

Thank you. And that’s I today. any like Adena Friedman all back the the time closing we have call for to remarks. would for questions turn to

Adena Friedman

and to continued closing, year I fourth forward our priorities. focused Great. and of Thank and full look starting quarter making will strategic led progress Nasdaq’s Well, deliver technology on discussions for momentum. And XXXX those was XXXX stakeholders that the to our strategy performance are we our with we executing throughout leadership solid against our in remains be team the you. year on strong

So much very today. time your for thank you

Operator

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

may a disconnect. have great Everyone You now day.

Nasdaq (NDAQ) 27 Jan 212020 Q4 Earnings call transcript