Nasdaq Inc at Goldman Sachs U.S. Financial Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Alexander Blostein - The Goldman Sachs Group, Inc. - Analyst : So I wanted to start off with your key priorities into 2025. So earlier this year, Nasdaq held an Investor Day outlining a number of key medium-term targets. We can go through all of them but at a high level, solutions revenue growth, 8% to 11%, again so you talked about 5% to 10% expense growth. You're well on your way there. You guys seem to be executing quite well on a pro forma base against these.

Question: Alexander Blostein - The Goldman Sachs Group, Inc. - Analyst : Got it, okay. Let's spend some time on probably all of these over the course of the next 30 minutes or so. I do want to start with Adenza. Obviously, it was a big deal for Nasdaq. You closed the about a year ago so you're well into integrating the transaction now. You talked about Adenza's ARR up about 15% year-over-year as of 3Q. So to your point, kind of right in the middle of what you promised the market. Can you update us on where you are in the integration process? What's been accomplished so far in 2024? What's coming up in '25? And one of the questions that I get all the time from the outside looking in, what are the -- some of the most important KPIs we should be focused on looking out into next year?

Question: Alexander Blostein - The Goldman Sachs Group, Inc. - Analyst : Yes, great. All valid points. Let's get maybe a little bit more specific. Adenza's growth overall is tracking up somewhere in the high teens, I believe, for 2024, and this is just revenue growth the way the market will obviously look at it. AxiomSL a bit slower, Calypso a bit higher. A lot of it is timing and just accounting recognition of various things. But as you look out into '25, '26, how should we think about growth for both of these businesses? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 11, 2024 / 8:00PM, NDAQ.OQ - Nasdaq Inc at Goldman Sachs U.S. Financial Services Conference

Question: Alexander Blostein - The Goldman Sachs Group, Inc. - Analyst : Yes, okay. All fair. Let's expand this a little bit. I want to talk about just banks as a customer segment because it cuts you guys in a number of different ways but also overlaying that with the current environment and, of course, the change in administration. There's a broader expectation that deregulation is coming or, to some degree, not as intense of a regulatory backdrop for the G-SIB banks and maybe some of the smaller banks. In addition to that, there's a view maybe there is going to be a bit more bank consolidation. So let's talk about both of these themes and how that could impact sort of various parts of your ecosystem. There's some natural businesses like Verafin, obviously, serves smaller banks. Axiom, you guys work with a lot of larger banks. So how do you think about that potential change in the context of your growth opportunity?

Question: Alexander Blostein - The Goldman Sachs Group, Inc. - Analyst : Got you, okay. How does bank consolidation affect you? I know we could cut it a number of different ways. But based on your experience with some other bank deals maybe from years ago, how -- which way do they typically cut? And I'm not sure if it's easy to summarize but how would you frame that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 11, 2024 / 8:00PM, NDAQ.OQ - Nasdaq Inc at Goldman Sachs U.S. Financial Services Conference

Question: Alexander Blostein - The Goldman Sachs Group, Inc. - Analyst : Okay, that's really helpful. Let's talk about fintech a little broadly and the way you guys articulate growth for that subsegment or segment of various subsegments within fintech. You talked about 10% to 14% revenue growth, and you expect to be at the upper end of that once you get a couple of years out from the Adenza acquisition, some of these revenue synergies come through. In one of your earlier comments, you mentioned that integration is going well. It sounds like $100 million of cross-selling revenue still clearly on the table. You feel pretty good about that. What's the timing around that? Just give us a little more color where you are in terms of cross-selling and actually recognizing some of these revenue synergies.

Question: Alexander Blostein - The Goldman Sachs Group, Inc. - Analyst : Got it, okay. Let's hit up Financial Crime for a couple of minutes. It's your fastest-growing business, mid-20s medium-term revenue growth targets. In '24, you're tracking a little bit below kind of 23-ish percent range. So still within the range, a little bit below the range. Can we talk a little bit about what kind of factors contributed to slightly slower growth this year? And how are you thinking about it next year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 11, 2024 / 8:00PM, NDAQ.OQ - Nasdaq Inc at Goldman Sachs U.S. Financial Services Conference

Question: Alexander Blostein - The Goldman Sachs Group, Inc. - Analyst : Great, okay. Let's talk about another really fast-growing business for you, which is Index. We spent quite a bit of time on this. You mentioned that earlier today as well. Clearly, lots of structural underpinnings in that business, and Nasdaq occupies an important role there. A lot of it has been beta, though, right? If I just look at the -- and I love the way you guys talk through your revenue bridge, what's alpha versus what's beta. Markets are up, a lot of flows coming into the Qs. That's all great news. How are you thinking about the alpha component? How are you thinking about either new index creation or expanding the customer base for the existing indices that are outside of the Qs, trading products against that? So what else are you doing to continue to drive growth in that business outside of just the beta?

Question: Alexander Blostein - The Goldman Sachs Group, Inc. - Analyst : Great, okay. Let's talk about some of the cyclical businesses for Nasdaq. Listing, probably the first one that comes to mind. It's been a bit slower. A couple of things going on there. Obviously, we haven't really seen a lot of IPOs in the last two years. On top of that, you were seeing some headwinds with respect to delisting's that impact revenue growth for you guys this year. To start, I guess talk a little bit about the pipeline. There's a lot of enthusiasm around IPO markets opening back up into 2025. What is sort of the expectation? I know it's going to be a slow build. It's not like there's a lot of IPOs and revenues next quarter, but that pipeline and sort of probability of that pipeline coming through, what are you guys seeing on the ground?

Question: Alexander Blostein - The Goldman Sachs Group, Inc. - Analyst : Got you, great. Not directly related to that but a healthy end customer base should also be helpful to some of your other, I don't want to call them legacy Nasdaq businesses, but let me just call them non-fintech recurring part of the solutions revenue stream. One thing that comes to mind is Workflow and Insights. It's been slower. One of the reasons it has been slower is obviously the customer base has been struggling to some extent. To what degree an easier capital markets backdrop, more companies going public, more IPOs could actually enhance the Workflow and Insights part of the business? That's the one that feels like it's the farthest below your targets in terms of growth and what I guess could that mean for growth over the next year or two?

Question: Alexander Blostein - The Goldman Sachs Group, Inc. - Analyst : I got you. And is that structure consistent on the as well when the company goes public on Nasdaq, solutions, or IR function and Boardvantage, like that is also coming in with a discount for three years and no fees for three years? Or there's room to change that where companies that are going public might -- if they want to sign up with the service, they might have to start paying for that right away?

Question: Alexander Blostein - The Goldman Sachs Group, Inc. - Analyst : Got it, okay. Let's talk about retail for a minute in terms of more of a thematic and a bit of a macro trade. But retail trading has been incredibly powerful and feels like it's accelerating. Talk a little bit about how you're thinking about monetizing that. I know we don't spend a lot of time talking about the kind of the exchange businesses for Nasdaq. But how big an opportunity is that? And I'm really thinking more from a data, access, connectivity perspective, a more vibrant, more active retail investor. What does it mean for Nasdaq? Kind of how do you take advantage of that?

Question: Alexander Blostein - The Goldman Sachs Group, Inc. - Analyst : And is there a pricing opportunity or a mix opportunity from retail platforms? So in other words, when a retail investor becomes more active or when (technical difficulty) a bunch of new customers, those that are taking market data. Does that come with a different price point and therefore, slightly more accretive than the back book? Does that make sense?

Question: Alexander Blostein - The Goldman Sachs Group, Inc. - Analyst : Got it, okay. Including like active retail, for instance, if somebody takes the more proprietary data?

Question: Alexander Blostein - The Goldman Sachs Group, Inc. - Analyst : Great, okay. We have about five minutes left so I do want to hit on two topics. One being expenses. You guys have executed quite well so far this year. You're targeting 5% to 8% expense growth over time, but you're still benefiting obviously from some of the synergies from Adenza near term. You said you've actioned to about 80% so far. I'm assuming not all of that is in the run rate for 2024. So just help us maybe unpack how much of what your action will hit in '25 on a run rate basis? And when does the remaining 20% hit the P&L?

Question: Alexander Blostein - The Goldman Sachs Group, Inc. - Analyst : Yes. Okay, fair enough. Capital management, similarly, to expenses and revenue, you guys have done a really nice job getting leverage lower towards your target levels. I think a lot of folks in the room also really appreciate a little bit of a buyback as part of the secondary earlier this year. So talk to us a little bit more about expectations for share repurchases in the next 12 to 18 months. Leverage level gets pretty comfortable fairly quickly here. So what are the expectations there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 11, 2024 / 8:00PM, NDAQ.OQ - Nasdaq Inc at Goldman Sachs U.S. Financial Services Conference

Question: Alexander Blostein - The Goldman Sachs Group, Inc. - Analyst : Once you get down to the appropriate leverage level, the way you talked about, is it fair to assume that buybacks will become a bigger part of the story, given how much cash you guys generate? Really high cash flow conversion. And to be fair, an important source of earnings growth potentially.

Question: Alexander Blostein - The Goldman Sachs Group, Inc. - Analyst : Okay, great. Well, I think we'll leave it there. Sarah, thank you very much. I appreciate your time. Thank you for coming to the conference.